Creating and managing multiple iTunes libraries

First we'll need to create an iTunes library for each person that's using that computer by performing the following steps:

Completely quit iTunes and make sure it is not running in the background. Now hold down either alt/option on your Mac or Shift on your PC and click to open iTunes again.
You'll notice instead of opening, iTunes is now asking you to either create a new library or navigate to an existing one. Click on the Create Library... option.
Now give it a name and choose where you want to save it at. For most people, the default Music folder is probably fine. After you've named it and selected where you want it to be located at, click on Save.
You'll now be able to scan for media for the new library or you can just sign in to iTunes and bring everything down that you've previously purchased with your Apple ID if you'd like.
Repeat this process and create a library for each person you'd like to have their own iTunes library to use with their own Apple ID.
How to switch between iTunes libraries

Now that you've set up an iTunes library for each person in your household, the rest is easy. You can easily switch between the libraries in just a few taps.

Completely quit iTunes and make sure it is not running in the background. Now hold down either alt/option on your Mac or Shift on your PC and click to open iTunes just like you did to create your libraries.
Instead of creating one, this time you'll select the option for Choose Library....